Pepper gains on weak arrivals

Pepper spot prices and futures ended higher 0.82% and1.43% respectively on account of lower arrivals amidst better offtakes at the domestic market. Reports of fresh arrivals from Vietnam and their pepper prices quoting at lower levels might however restrict prices from trading higher.
Harvesting in Vietnam has commenced and the prices offered by them in the international market for their 550Gl are around $4,500/tonne. Arrivals are likely to gain momentum by March. In the first month of this year pepper exports from nation was around 7,000 tonnes. According to the Ministry of Agriculture and Rural Development (Vietnam), pepper exports in January year-on-year jumped by 40.7 per cent despite a decrease of 7 per cent in volume (Source: Peppertradeboard).
According to International Pepper Community (IPC) report, export of black pepper from India during April 2010 – January 2011 plunged 7% to 15,700 tonnes as compared to 16,925 tonnes in the same period previous year (2009). However, imports from the country surpassed the exports and stood around 18,000 tonnes in 2010 against 15,200 tonnes in 2009.
Import of Pepper in U.S. in 2010 gained by around 7% and stood at 70469 tonnes as compared to 65,855 tonnes in 2009. Indonesia held its position of being the largest exporter shipping around 25,174 tonnes to U.S. followed by Brazil (11,517), Vietnam (10,241) and India (4,064) tonnes.
Production and Arrivals
Arrivals of pepper in the domestic mandi on Tuesday were around 10 tonnes amidst similar offtakes of 05 tonnes as compared to 10 tonnes of arrivals and offtakes of 05 tonnes on Monday.
Production of pepper in India in 2010-11 is projected to be 48 thousand tonnes (according to the Spices Board) as compared to 50 thousand tonnes last year. However, there are expectations that this estimate would be lowered further on account of the disease attacks and erratic rainfall in the major growing areas particularly Kerala and Karnataka.
In the international pepper markets too output is expected to decline this year. Black pepper production in Vietnam, the largest pepper producer, is likely to be lower by around 9 percent at 1 lakh tones as compared to 1.10 lakh tonnes in the previous year.
Pepper production in Brazil stood around 27,000 tonnes in 2010-11 as compared to 35,000 tonnes the previous year.
Outlook
Pepper prices in the intraday are expected to trade sideways on account of lower arrivals in the domestic mandi and lackluster demand from overseas buyers. Fresh arrivals which may gain pace in the coming days in Vietnam will also pressurize the prices. In the short term (till mid of March), Pepper prices will depend on demand from the overseas and domestic market and fresh arrivals in the physical mandi in Kochi. Prices will also take cues from the Pepper fresh arrivals in Vietnam and pepper prices in the international market of various origins particularly India, Vietnam, Indonesia and Brazil.
In the medium to long term (March end onwards), price trend will depend on pepper stocks with Indonesia and demand from the overseas and domestic buyers.